Sales Tax Dispute – Amazon Relies on the First Amendment

The US Constitution protects the disclosure of what reading and video materials citizens read and view, in spite of the North Carolina Department of Revenue’s best efforts. US District Judge Marsha Pechman granted Amazon’s summary judgment that precludes disclosure of Amazon’s “customers’ names, addresses or any other personal information.” The order states that “Amazon has conducted nearly 50 million transactions with North Carolina residents from August 1, 2003 to February 28, 2010, apparently without collecting or remitting North Carolina sales and use taxes.” As result of these sales transactions there was a sales tax dispute and Amazon has already provided “order ID number, seller, ship-to city, county, postal code, the non-taxable amount of the purchase, and the tax audit record identification.” Amazon filed its lawsuit in Washington State to avoid disclosing the customer personal information, and the American Civil Liberties Union joined Amazon. Luckily the Constitution protects the information that we read and view, however we will clearly see more challenges of this sort to learn about personal information.

Texas Bills Amazon $269 Million for Unpaid Sales Taxes

Amazon started operations in Texas in 2005 and not paid any sales taxes, so the Texas Comptroller of Public Accounts recently demanded that Amazon pay Texas $269 million. It’s easy to understand why state and local governments want sales tax revenue, but whether there’s a taxable transaction is not that easy to figure out. Amazon is a big target since 2009 sales were $25 billion. Recently I bought a book from Amazon, but where the taxable transaction took place is what’s hard to determine. Amazon is in Washington State, but the server could be in California, and the book shipped from Kansas to me in Texas. What difference does it make that Amazon has any business operations in Texas since it was not part of my purchase? Surely we can count on Internet sales tax issues to continue for some time.

Peter S. Vogel is a trial partner at Gardere Wynne Sewell LLP, where he is Chair of both the eDiscovery Practice and Internet, eCommerce, and Technology Industry Team. From 1997 until 2009, Peter served as the founding chair of... More...

Stay Connected

Internet, eCommerce & Technology Industry Team

The Gardere Internet, eCommerce and Technology Team assists clients that operate in regional, national and global technology markets. The Internet has transformed social communications and business operations, and our attorneys have years of diverse experience dealing with the distinct needs associated with technology. We are experts with legal issues and concerns that face technology businesses that now operate in a global Internet community.